The U.S. stock market advanced in 2020, and Wall Street’s three main indexes surged to record highs last week. The main reason for this is that investors hope that a fiscal stimulus and coronavirus vaccines will drive a robust economic recovery in 2021.
The S&P 500 (SPX) has advanced 16.3% in 2020, the Dow Jones Industrial Average (DJIA) has rallied 7.2%, while the Nasdaq Composite (COMP) has advanced 43.6%, which was the biggest gain for the tech-heavy index since 2009.
On the other side, the dollar was the weakest currency for 2020, which has declined to multi-year lows against most of its major rivals on the F.X. market. The greenback demand remained subdued, and the U.S. dollar could extend its decline during the upcoming weeks.
Uncertainty and fear related to the covid pandemic made for Wall Street’s three main indexes most volatile year in over a decade. The U.S. Federal Reserve reported that it would support the economy for as long as needed using its full range of tools because the U.S. still needs to face the COVID-19 challenges.
“We are going to keep policy highly accommodative until the expansion is well down the tracks. And we’re not going to preemptively raise rates until we see inflation actually reaching 2% and being on track to exceed 2%”, said Fed’s chairman Jerome Powell.
The U.S. reported over 290K new coronavirus cases this Saturday, and there is still a long way to fight against the pandemic.
S&P 500 has advanced 16.3% in 2020The S&P 500 (SPX) has advanced 16.3% in 2020 and closed at 3,756 points.
Data source: tradingview.com As long the price is above this trend line and 3,000 points, the S&P 500 index remains in a bull market, and there is no indication of the trend reversal.
DJIA advanced 7.2% in 2020The Dow Jones Industrial Average (DJIA) advanced 7.2% for the year and closed at 30,606 points.
Data source: tradingview.com Most fund managers do not expect a sharp pullback in 2021, but the current risk/reward ratio is not good for long-term investors, in my opinion. Some analysts even say that we will continue to see a push higher as the FED announced that it would support the economy for as long as needed.
As long the DJIA is above 28,000 points, this index remains in a bull market, and if the price jumps above 31,000 points, it would be a buy signal for Dow Jones Industrial Average (DJIA). On the other side, if the price falls below 30,000 points, it would be a firm “sell” signal, and we have the open way to 29,000 points.
Nasdaq Composite (COMP) has advanced 43.6% in 2020Nasdaq Composite (COMP) has advanced 43.6% in 2020, which was the biggest gain since 2009.
Data source: tradingview.com The critical support levels are 12,000 and 11,000 points; 13,000 represents the resistance level. If the price jumps above 13,000 points, it would be a “buy “signal for the Nasdaq Composite index, but if the price falls below 12,000 points, it would be a strong “sell” signal, and we have the open way to 11,000 points.
SummaryThe U.S. stock market advanced in 2020, and Wall Street’s three main indexes surged to record highs last week. The S&P 500 (SPX) has increased 16.3% in 2020, the Dow Jones Industrial Average (DJIA) has rallied 7.2%, while the Nasdaq Composite (COMP) has advanced 43.6%. Most fund managers do not expect a sharp pullback in 2021, but the current risk/reward ratio is not good for long-term investors.
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